Tax Tips for Investors.
Tax Time – What can I Claim?
(We wish to note that the information contained herein is simply a guide, and an opinion. Raine & Horne Kingborough Rentals strongly advise you to directly consult your accountant or tax agent for professional financial advice).
Tax time can be a real minefield! Of course you want to get the most out of your return – it’s your hard earned money – no one likes to hand that over! But keeping all those pesky receipts, recording logbooks all year long, trying to claim any little last thing you can – it can be SO confusing about what is and what isn’t actually allowed!
Being the Owner of a rental property adds a whole extra element of record keeping and potential claims. As if managing your own income tax wasn’t enough…
That’s just another reason to engage a great Managing Agent (Like us!) to look after your valuable investment – then WE worry about all those records and receipts and claims for you. Having an expert Property Manager, and a switched on Accountant - are both imperative to the successful running of your Investment Property business.
All of your Property Management Agents fees and charges will be claimable; and most improvements or repairs undertaken are also considered a tax-deductible expense or depreciable item.
We have complied a brief (and completely non-exhaustive) list of just some of the claims and deductions you can include when you have Raine & Horne Kingborough Rentals look after your rental property:
- Advertising & Marketing Costs
- Letting Costs
- Ongoing Management Fees
- Cleaning, gardening and lawn mowing
- Repairs and maintenance
- Legal expenses
- Stationery and postage costs
- Travel expenses incurred when inspecting the property
And here is another brief list of general items that the ATO also outlines as tax-deductible expenses:
- Land Tax
- Body corporate fees and charges
- Bank charges and account keeping fees
- Borrowing expenses
- Municipal rates, Water & Sewerage rates
- Decline in value of depreciating assets
- Landlord Insurance
- Interest Payments on your rental property Mortgage
The Australian Tax Office website (www.ato.gov.au) has a great and very thorough (yes, completely exhaustive!) list of ALL the deductions and claims you can (and cannot) make. They have a great brochure that you can access & print out here which also answers some great questions on the rental investment world, including items such as maintenance vs capital improvements; capital gains tax; different types of rentals, etc
When you have your property managed by Raine & Horne Kingborough Rentals, we use an advanced and specialised Property Management Software System to digitally record all the incomings and outgoings on your property – all year round.
We are able to receive and pay all invoices for maintenance, council rates, land tax, water rates and Body Corporate Fees (where applicable) on your behalf. These accounts are all paid directly out of the rental income from your property, and will be listed on your monthly statement. All of our fees and advertising charges also come directly from your rental income – so you will never receive and actual “bill” from us. When we send out your regular payments – what you receive is a ‘Net Amount’, which effectively means: ‘remaining income, after all costs have been deducted already’.
At the end of each financial year, we then create for you a personalised End of Financial Year Statement. This is a very easy-to-read document, which simply states all the incoming and all the outgoing expenses (these will be split into headings, so you can see what the expenses were).
You simply hand this EOFY statement to your Accountant, with your own banking records (and any other financial documentation that they may require) and they will do the rest on your behalf.
Some Tax Specialists request a professional Tax Depreciation Schedule be completed on your property. This is a Financial Document outlining the value of all depreciable items in your property (I.e: Carpets, curtains, appliances, etc) – and the rate at which they should/can be depreciated. However some Accountants are happy to create and use their own schedule of averages. We recommend you seek your own advice directly from your accountant on this one.
So there you have it! Tax time in a nutshell. We hope that we have been of some assistance with this article, but do strongly suggest you seek all final professional advice from your own Tax Accountant. Best of luck with a great return for your next tax year!!